Why Depreciation is a Game-Changer in Manufactured Housing Investing…..
Depreciation is one of the most powerful tax advantages available to investors in commercial real estate.
Through depreciation, we can significantly reduce taxable income and enhance cash flow, even as the property appreciates in market value.
With the Jobs Act of 2017, investors in specific property types—like Manufactured Housing—are especially well-positioned to benefit from deprecation and, therefore, value enhancement.
Here’s How It Works:
Depreciation allows investors to deduct the cost of the property (excluding land) over varying time frames based on the differing segments of the property:
• Commercial: 39 years
• Residential: 27.5 years
• Land Improvements (like roads, utilities, landscaping): 15 years
• Personal Property (such as fixtures and equipment): 3 to 7 years
Manufactured Housing communities typically have a significant portion of their costs (over 50%) that qualify as “Land Improvements,” benefit #1.
The Jobs Act of 2017 provides for bonus deprecation for Land Improvements—a 60% bonus for tax year 2024, benefit #2.
These two benefits—the shorter timeframe of 15 years on an outsized portion of the cost and the bonus depreciation provision of 60%—are enormous advantages for investors in Manufactured Housing.
Compared to other commercial estate investments, this accelerated depreciation directly increases cash flow by reducing taxable income, resulting in more funds available for reinvestment, faster growth, and greater compounded returns.
Attainable Housing Collective LLC advocates for and invests in Manufactured Housing Communities.